Does Inflation Targeting Matter?

Niamh Sheridan and Laurence Ball

No 2003/129, IMF Working Papers from International Monetary Fund

Abstract: This paper asks whether inflation targeting improves economic performance, as measured by the behavior of inflation, output, and interest rates. We compare 7 OECD countries that adopted inflation targeting in the early 1990s to 13 that did not. After the early 1990s, performance improved along many dimensions for both targeting and nontargeting countries. In some cases, the targeters improved by more. However, these differences are explained by the fact that targeters performed worse than nontargeters before the early 1990s, and there is regression towards the mean. Once one controls for this, there is no evidence that inflation targeting improves performance.

Keywords: WP; inflation targeting country; inflation-targeting dummy; unit inflation shock; inflation expectation; inflation targeters; OECD inflation forecast; Inflation Targeting Regime; inflation-targeting period; trend inflation; inflation persistence; Inflation; Inflation targeting; Corporate income tax; Production growth; Short term interest rates (search for similar items in EconPapers)
Pages: 36
Date: 2003-06-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (221)

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Related works:
Chapter: Does Inflation Targeting Matter? (2004)
Working Paper: Does Inflation Targeting Matter? (2003)
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